Tag Archive | "DMEautomotive"

Service Retailers Missing Best Chance at Increasing Customer Pay Revenue, According to New Research

DAYTONA BEACH, Fl.– – DMEautomotive (DMEa), released key findings from a national survey conducted among 2,000+ U.S. vehicle owners by its Strategy & Analytics Division. The new data reveals a changing consumer purchasing process for the auto service industry’’s high-volume, high-profit brakes, batteries and tires that indicates new sales and marketing strategies, especially for younger car owners, are needed by service retailers.

With battery, brake and tire replacement services representing tens of billions in customer pay dollars annually, the findings serve as an industry wake-up call. On average, only one car owner in twelve first learned that they needed new brakes, tires or a battery from a dealer or mechanic, indicating that a passive sales approach is leading to lost revenue opportunities. And, while the survey reveals that consumers, on average, do a large amount of research on these services, it’’s the under-35 customer that’s radically remaking the path-to-purchase: not only are they far more likely to research providers, using more digital media sources, and to start researching further in advance, they’’re also exponentially more likely to both buy, and consider buying, their tires and batteries online.

“This new research helps all service businesses understand today’s brakes/battery/tires purchasing funnel, so they can put in place the right, cross-channel strategies to grow market share,” said Doug Van Sach, Vice President of Strategy & Analytics at DMEa. “

While both the aftermarket and dealerships alike are missing out on crucial revenue opportunities, Van Sach noted that other, recent DMEa research reveals that aftermarket players are winning the brakes-battery-tires war, with only 64% of dealer customers reporting they would consider using dealers for brake services,– 46% for battery replacements– and 36% for tires. Only 44% are likely to choose dealerships for these services (in aggregate) within the first two years of in-warranty ownership. And, as vehicles hit 3-6 years, dealers lose roughly half of this business. Furthermore, DMEa research shows that for dealers, cracking the under-35 shopper’s service selection “code” is mission critical, as roughly half of aftermarket chain loyalists are now under-35, while half of dealer loyalists are an aging 50+.

Key Findings
Customers aren’’t actively monitoring their brakes, battery and tire health, …and neither are retailers. Seventy percent reported they realized they needed to replace their battery because it was already dying/dead – 44% realized they needed new tires because they personally noticed they were worn out – and 69% became enlightened that they needed brakes because they were already squeaking, grinding or having other issues. Dealers and mechanics are clearly not aggressively identifying or recommending these service needs.

For relatively simple auto services, a surprisingly high level of provider-selection Internet research is going on – another window into the intensely disloyal service market. Thirty-nine percent researched where to have their most recent battery replaced, with 77% performing that research within a week of replacement. Forty-one percent researched where to have brakes replaced, with 63% starting that research within a week of service. For tires, research levels are even higher, and people are also taking more time to find the right place to buy: 58% researched their last tire purchase, and 47% began researching stores a month or longer before they pulled the trigger.

The survey found that the under-35, dealer-resistant consumer’s brake/battery/tire purchase process is a far cry from their “grandfather’s,” with this age group researching these services at rates over two times higher than those over 35. Additionally, younger car owners research significantly further in advance. For instance, for tire purchases, they’re 62% more likely to start their tire research 2-5 months out, compared with those over 35.

Those under 35 are also more likely to consult a variety of external sources, especially digital media. For example, the survey closely examined the tire purchasing process and found that younger consumers consulted every commonly used resource when researching tires (whether TV or print ads – or asking a mechanic or friend) at higher rates than those over 35. They were also nearly three times more likely (31%) to consult store Web sites than those under 35 (13%), with store sites representing the top resource this younger shopper uses. Web sites also have a more powerful impact on the under-35: over 50% reported store/auto sites impacted their tire purchase, vs. 25-30% of those aged 35+.

The under-35 customer is also radically more likely to buy, and consider buying, their tires and batteries online. And those that have made online purchases seem very satisfied: across all age groups, more than 90% that have purchased batteries/tires online would do so again.

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Maintenance Plans Keep Consumers Servicing at Dealership After Expiration

DAYTONA BEACH – DMEautomotive (DMEa) released findings from its new national consumer survey that provides insight into the state of prepaid (PPM) and complimentary dealer and OEM maintenance plans, from current penetration rates and customer satisfaction levels, to the precise role these plans play in dealership service retention.

“Our survey provides fresh evidence that both prepaid and OEM-provided maintenance plans have a powerful impact on dealer service retention,” said Doug Van Sach, vice president of strategy & analytics at DMEa. “With nearly three in five consumers reporting they are likely to continue servicing at the dealership after their plan expires – compared to average dealer post-warranty retention rates of 22% to 40% (depending on vehicle make and age) – these programs can more than double service business that typically bleeds to the aftermarket, while also having a profound impact on retaining the young, traditionally dealer-averse, service shopper’s business.”

While the majority (65%) report using their plan for “all” scheduled maintenance, a surprising 25% have only used it for “some” of their covered services. So, even though a free or paid-for plan is in place, plan holders are still choosing to spend service dollars outside the dealership – a possible reflection of the lack of convenience traditionally associated with dealership service centers. Also, a significant percentage of plan-holders either are not being consistently engaged by their dealership, or are not finding value in their plans, with 9% reporting they have not used it at all.

Overall, 56% of those with a maintenance plan report they’re likely to keep servicing at the dealership when the plan expires (with only one in five claiming they’re unlikely to). Dealerships clearly need to work hard to keep those in-plan loyalist intenders, and move the 25% that report they’re on the fence about sticking with the dealership to the loyalty column.

How much consumers use their plans, and whether they exclusively service with that dealer, correlates with a significantly higher likelihood to continue service with that dealership post-plan. For instance, 62% of those that use plans for “all” service are likely to stick with the dealer. And nearly two times more consumers in that group report they’re “very likely” (30%) to return to the dealership, compared with those that only have “some” maintenance performed under the plan (17%).

Capturing the Younger Market
While young, under-35 servicers present the most profound loyalty challenges for dealerships (data confirmed by previous DMEa white papers), this survey reveals that maintenance plans represent a major opportunity to connect with – and retain – them. Not only were those under 35 more likely to have a maintenance plan (31%) than those 35+ (18%), they were significantly more likely to use their plans for “all” maintenance (72%) than older customers (61%).

Notably, those aged 25-34 (who used plan for “all” maintenance) reported the very highest plan satisfaction (84%) compared with any age group – and 62% of that segment reported they’re likely to service at the dealership post-plan. With prior DMEa data revealing that the largest group of dealer-disloyalists are aged 25-34 (representing over one-third of total disloyalists), it’s clear that maintenance plans are a uniquely powerful way to drive more loyalty among that critical ‘next wave’ of traditionally dealer-resistant servicers.

“It’s imperative that dealers and OEMs offer free and prepaid programs, because more than half of all consumers currently under one indicate they will stay with the dealership post-plan,” noted Van Sach. “Our data did contain some surprises: one in four customers still stray from the dealership while under a plan; and consumers who do not have “all” service performed under the plan are significantly less likely to continue servicing at that dealership. So, if dealers or OEMs imagine that under-plan service taken elsewhere just means more profits – or that they don’t need to worry about keeping these customers very ‘close’ and satisfied until plan expiration – this data clearly shows that those beliefs need some revising.”

This maintenance plan “market snapshot” represents first findings from DMEa’s newest survey on current service consumer behavior and trends. Reports on diverse topics, from QR Code, mobile app and social media usage, to how servicers research specific service purchases, will be released over the next three months.

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